Singapore vs Dubai: Which City Is Better for Business in 2024?

If you want to expand your business globally, consider incorporating in a favorable offshore business center beyond simply having an offshore bank. If Asia is your focus, your decision only comes down to Hong Kong or Singapore. But if you are unsure or neutral on geography, the question you might be asking is "Singapore vs Dubai, which is better for business?" While Dubai and Abu Dhabi are popular locations for doing business, they are only two of the seven territories and zones in the United Arab Emirates (UAE). Still, Singapore and Dubai are commonly at the top of people’s minds as global business hubs. The World Bank ranked Singapore as the most pro-business economy in the world. The United Arab Emirates and Singapore are in the top 20 on the Ease of Doing Business index rankings.

Let’s dive deeper into the differences and advantages of each to help you decide which might be the better fit for your business needs.

Legal and Regulatory Framework

For entrepreneurs eyeing global expansion, understanding the legal and regulatory landscapes of potential business jurisdictions like Singapore and the UAE is crucial. 

Each country's unique legal framework, from Singapore's transparent English Common Law system to the UAE's blend of English common law and Sharia law, impacts everything from compliance, business structure, ownership, taxation, intellectual property protection, and dispute resolution. 

Singapore’s Legal Framework

Singapore operates under a common law jurisdiction that offers various business structures like sole proprietorships, companies (most commonly private companies limited by shares), limited partnerships (LP), and limited liability partnerships (LLP). The country is known for its streamlined and efficient business registration process, typically handled through the Accounting and Corporate Regulatory Authority (ACRA) via its online platform, BizFile+. 

There are minimal capital requirements for establishing businesses, making it accessible for foreign investors to start operations. Singapore is also famous for its efficient contract enforcement, with a World Bank report highlighting an enforcement rate of approximately 85%.

💡Did you know? Singapore has a specific visa for entrepreneurs called the Entrepreneur Pass or EntrePass. EntrePass allows entrepreneurs to control their businesses fully.

UAE’s Legal Framework

UAE presents a different approach with its dual system of Free Zones and mainland business setups. The UAE allows foreign investors up to 100% ownership in Free Zones, offering benefits like import duty and exemptions from being subject to VAT, along with a simple VAT registration system. However, for mainland businesses, the norm has been a requirement for a local sponsor with a majority share. However, recent reforms have begun to allow 100% foreign ownership in certain emirates – certain territories of the UAE. The UAE's legal framework offers a variety of options for business structures, including Limited Liability Companies (LLC), branches of foreign companies, and Free Zone establishments, each with its specific regulatory requirements. The significant variety of legal systems across the seven emirates may make it challenging to navigate.

Businesses in the UAE need to register for VAT if their taxable supplies and imports exceed the federal mandatory registration threshold of AED 375,000 over the previous 12 months or are expected to exceed in the next 30 days.

Dubai's legal system is a blend of International and Sharia laws, influencing various aspects of its business regulations. Under Sharia law, there are instances where women face discrimination.

For example, Muslim women may need to secure permission from a male guardian, such as their father or husband, to work or start a business, potentially delaying the business setup process for female entrepreneurs. In the private sector of Dubai, women lead only about 10% of businesses.

The mix of Sharia and international laws can create confusion for expatriates. The UAE's contract enforcement rate stands at a lower 75%, making Singapore come out ahead there.

Dubai Tax vs Singapore Tax

Singapore Tax

Singapore boasts a competitive federal corporate tax rate of 17%, with effective corporate tax rates potentially lower due to various tax incentives for specified activities and industries, such as R&D, intellectual property management, and financial services. Under 100,000 SGD, 75% is exempt. There's no tax on capital gains, and a Goods and Services Tax (GST), also known as a Value Added Tax, applies at 7%, set to increase to 9% over the coming years. Singapore also offers a wide range of tax treaties to prevent double taxation​​​​. 

UAE Tax

On the other hand, the UAE, where Dubai is one of its seven emirates, does not levy personal income tax and has recently introduced a flat federal corporate tax of 9%. The UAE also does not have capital gains tax. The UAE's Free Zones offer tax exemptions, further attracting foreign investment. The UAE has a robust network of double taxation treaties, ensuring competitive taxation for businesses operating within its borders​​​​. This is why many people use the phrase"Dubai Tax haven" when speaking of the UAE.

Ease of Doing Business

Singapore’s Ease of Doing Business

Known for its efficient regulatory environment, Singapore ranks highly on the Ease of Doing Business Index, ranking 2nd in the world. The city-state offers a streamlined process for business registration, intellectual property protection, and a transparent legal system. Its strong protection for investors and the flexibility it provides to foreign entrepreneurs sets Singapore apart, allowing foreign entrepreneurs to own 100% of a company. The legal framework in Singapore is transparent and firmly rooted in English Common Law, providing a familiar and reliable foundation for businesses.

Singapore requires listed companies to comply with the Code of Corporate Governance on a "comply-or-explain" basis, covering principles and practices for good corporate governance. The management structure typically involves a board of directors and is supported by senior management, with decisions taken at board meetings or through written resolutions. Since businesses that incorporate in Singapore typically need a local director, that makes it a lot easier to do business and comply with government regulations with someone on the ground.

UAE Ease of Doing Business

The UAE offers a unique proposition with its Free Zones, providing 100% foreign ownership, full repatriation of profits, and no import or export duties. The UAE's strategic location as a gateway between the East and West and its investment in infrastructure and technology makes it a competitive choice for businesses looking to expand in the Middle East and North Africa (MENA) region​​​​. UAE businesses, especially in Free Zones, enjoy flexibility in corporate governance tailored to attract foreign investors. Each Free Zone has its own regulatory authority, offering a variety of licenses and business structures with streamlined processes​​​​. The diversity of legal systems may be confusing to some, but it may favor those seeking flexibility.

Still, the UAE is a recently developed global business hub, and many changes may still be coming. In 2023, the UAE increased the corporate tax from 0% to 9%, following a significant change that just occurred in 2022. On the other hand, Singapore is a much more mature global business hub and is typically more predictable. Additionally, Singapore uses English as the language of business, while the UAE will require certain documentation to be filled out in Arabic. 

The fees associated with a business license renewal in the UAE range from AED 8000 to AED 13000, while in Singapore, it may be as low as 60 SGD. Many people cite this as a reason for creating a company in Singapore. 

For example, the process of setting up a company in Singapore can be completed in as little as 3 days for non-residents and just 1 day for local citizens, with corporate taxes being a common reason for foreigners to set up a company here. 

Corporate taxes also incentivize foreign businesses to incorporate in the UAE, particularly Dubai and Abu Dhabi. While the government of the UAE claims that the process could take as little as 15 minutes, this assumes that one already has gone through the lengthy process of obtaining other Emirati IDs and passes. 

Quality of Life

Singapore’s Quality of Life

Singapore offers a multicultural environment, a high quality of life, and a strong emphasis on safety and cleanliness. Its variety in the culinary scene and diverse cultural attractions enrich the lifestyle for residents and entrepreneurs. 

Popular hotel destinations such as the Marina Bay Sands position visitors close to attractions such as luxury shopping at Clarke Quay, vibrant cultural attractions such as Chinatown and Haji Lane, and other fascinating things to do and entertainment options.

Education and healthcare in Singapore are of exceptional standards, with the country boasting some of the world's top-ranking universities and medical facilities. This, coupled with its low crime rate, makes Singapore particularly appealing to families and professionals seeking a safe and nurturing environment for growth and development.

📌 Did You Know? It is mandatory in Singapore to give employees certain benefits and paid time off. This makes Singapore attractive to top talent, which helps you find and hire the best if you are based in Singapore.

The government's commitment to sustainability and green living is evident in Singapore's urban planning. The city is adorned with parks, gardens, and green buildings, earning it the nickname "City in a Garden." This commitment to a clean and green environment enhances the quality of life for its residents, offering a breath of fresh air amidst the urban landscape.

Dubai’s Quality of Life

While both Dubai and Singapore have high living costs, Singapore’s living costs are slightly higher. Yet the purchasing power of living and working in Singapore outweighs the difference in cost. Still, the comparison is not straightforward.

Restaurants in Dubai cost 7.8% more than in Singapore while shopping for groceries in Dubai will likely save you 37.5%. To maintain the standard of living that one gets with 10,000 USD in Singapore, one only needs to spend 8,300 USD in Dubai. However, the local purchasing power in Dubai is 24.1% lower than in Singapore.

In contrast, the UAE, with Dubai and Abu Dhabi as its most prominent cities, offers a luxurious lifestyle characterized by luxury shopping malls, world-class infrastructure, and cutting-edge architecture. Given that expatriates pay no personal income tax, the UAE ranks highly on many individuals' lists of preferred places to live, with Dubai often emerging as a prime choice.

While Singapore has the Marina Bay Sands, Dubai has the Burj Khalifa, the tallest building in the world. Like how the Marina Bay Sands is close to Clarke Quay, the Burj Khalifa is also near attractions like the Dubai Mall, making both Singapore and Dubai convenient and exciting cities.

However, Dubai and, by extension, the UAE's quality of life is also marked by its cultural diversity and rapid development, which brings together a mix of traditions and modernity. While it provides excellent healthcare and education, the cost of living can be high, and the social life is often centered around expatriate communities. The culture in the UAE can lead to lifestyle limitations, such as religious dietary restrictions on pork and other Sharia law prohibitions.

In short, the quality of life in Singapore may be slightly more favorable.

Consider Singapore If

You Prioritize Regulatory Predictability:

Singapore's well-established legal and regulatory framework, rooted in English Common Law, offers a transparent and stable environment for business operations. If you seek certainty and reliability in your business dealings, Singapore's regulatory consistency may be appealing.

You Aim for Global Connectivity:

Situated at the heart of Asia, Singapore serves as a strategic gateway to South Asian, Southeast Asian, and East Asian markets. If expanding your business reach across these regions is a priority, Singapore's geographical advantage can facilitate seamless access to diverse markets.

You Value Efficient Business Processes:

Singapore's streamlined business registration process, minimal capital requirements, access to talent, and efficient contract enforcement mechanisms contribute to its reputation as a business-friendly destination. If you prioritize hassle-free business setup and operations, Singapore offers a conducive environment.

Consider the UAE If:

You Seek Lower Taxation:

With its recent introduction of a flat federal corporate tax rate of 9% and no personal income tax, the UAE, including Dubai, appeals to businesses seeking tax advantages. If minimizing tax liabilities is a primary concern, the UAE's favorable tax environment could be advantageous.

You Target the MENA Region:

Positioned as a gateway to the Middle East and North Africa (MENA) region, the UAE offers strategic access to a vast market landscape. If expanding your business footprint in MENA countries is a strategic imperative, the UAE's geographical proximity and connectivity may be beneficial.

You Value Flexibility in Business Setup:

The UAE's dual system of Free Zones and mainland business setups provides flexibility in structuring business entities. If you prioritize repatriation of profits and tailored corporate governance frameworks, the UAE's diverse business setup options can cater to your preferences.

You Operate in Industries Aligned with UAE's Strengths:

Dubai, in particular, has been actively diversifying its economy beyond oil and focusing on sectors like finance, trade, and technology. If your company aligns with the UAE's economic priorities or operates in industries thriving within the UAE's ecosystem, establishing a presence in the UAE may offer strategic advantages.

🌍 Decided on the UAE? Check out this roadmap to setting up your business in Dubai and other Emirati jurisdictions. 

Final thoughts

While Singapore and the UAE offer compelling advantages for businesses, Singapore's government and regulatory environment, tax regime, and global business connectivity make it particularly attractive for most people whose businesses are looking for a stable, efficient, and strategically located hub in Asia.